One of the perennial debates that rage in business and political circles is how to boost innovation and entrepreneurship in the UK. Suggested solutions include increased access to finance and changes to the education system. However there are other solutions; we can foster business growth, and boost entrepreneurship by building bespoke physical environments, such as innovation centres. Creating collaborative working environments helps micro businesses, SMEs and entrepreneurs work more effectively, helping to reduce the number of businesses that enter insolvency within the first few difficult years.
Locating a number of growing enterprises within a dedicated hub offers a number of defined benefits. It enables them to draw on support services available through the economies of scale generated by having a multitude of businesses within a defined location that would not be available were they located independently. Access to IT support, superfast broadband connections, accounting solutions, meeting space and business mentors would simply not be possible to deliver cost effectively across a multitude of locations.
Many entrepreneurs and business owners have great ideas for new products or services, but they lack the knowledge in discrete areas of business acumen and company management to ensure their endeavours are successful.
Creating small collaborative business environments, such as innovation centres with a specific industry focus, can help drive knowledge sharing between small firms. Small businesses often shy away from sharing information because they fear they don’t have the strength via patents, or legal representation, to protect intellectual capital. With innovation centre managers helping broker collaboration, rules can be clearly defined to facilitate information sharing that would simply not occur when businesses work independently in separate locations.
One business owner operating from Pool Innovation Centre in Cornwall (PIC) recently commented: ?We re very in favour of collaboration. At PIC you see what other businesses are doing and how they are getting on. Another stated, “I was a bit anti-collaboration, but I see there are benefits, if the rules are agreed properly. Having arbiters who can help agree rules for joint working minimises the risk of business disputes, which fosters collaboration and growth.
Tailored innovation centres can offer bespoke solutions to meet the changing needs of a company. Having dynamic office space, with a range of flexible space options is vital for growing businesses that cannot afford to keep relocating as they expand. The difficultly many firms face when attempting to expand is that space limitations mean they have to relocate, driving up logistical costs from moving and the additional charges from changing sales and marketing collateral. For PIC the flexibility of the client accommodation term (often a single month) is a significant factor in supporting growth along with the relatively short three year growth focus on clients using this accommodation.
Academic analysis reveals the measureable benefits of these environments for tenant businesses. The University of Plymouth has conducted a benchmarked comprehensive analysis of business performance in innovation centre environments within Cornwall. Within the innovation centres surveyed, the cumulative turnover of the 28 businesses surveyed for 2012 was £26.5m compared to £16.6m in 2011, a growth of 59.6 per cent. The research revealed that 83 per cent of the companies surveyed believed being located in this environment helped them to create additional jobs. In the sample base, this equated to 24.5 full time employment positions.
Plymouth used the following “formula”: Gross Value Added (GVA) calculations (GVA = Operating profit + Compensation + depreciation), to project the future performance of 15 businesses operating from innovation centres in Cornwall. The GVA of these businesses was projected to rise 40 per cent from current levels by £2.5m. These performance indicators reinforce the value that creating collaborative, bespoke physical environments can have on business performance.
Cornwall Innovation has been supported by Cornwall Council and the European Regional Development Fund Convergence Programme. These bodies are investing in the creation of these centres to provide a tangible economic boost, attracting innovative dynamic businesses to the region and are delivering tangible measurable results.
Bernard Curren is the Pool Innovation Centre manager.